Ukrainian economy is recovering. The active interest of non-residents in the investment projects of the country is due to political and economic stabilization, growth of GDP and incomes of the population. Analysts highly appreciate the short and medium term investment attractiveness of real estate in Ukraine. In this article we will tell you what optimism is based on.
Pricing in the market is cyclical and is going through phases of growth and decline. On the example of domestic real estate, several cycles are clearly traced:
Until 1991 The real estate market in the USSR as such was virtually absent. With independence, Ukrainian citizens were able to privatize housing, commercial and industrial facilities and conduct sales transactions.
1991-1997. Growth phase. With the emerging demand and meager incomes, an entire apartment in the center of Odessa without repair cost $ 1900-4000. By 1997, housing prices had risen sharply and reached $ 700-850 / m².
1998-2001. The crisis. The economy segment sags 35-40%. Elite real estate holds a position with a decrease of 10-12%.
2002-2008. The boom in mortgage lending, the “bubble” in the secondary housing market, the construction of private cottages and apartment buildings. The median price of the metropolitan premium reaches $ 8,000 / m².
2009-2017. The global crisis, political instability and a threat to the country’s integrity led to the collapse of mortgage programs, the liquidation of banks and the bankruptcy of developers and industrialists. Economy segment prices dipped by 40-50%, premium prices by 20-25%.
2018-2019. Stabilization of the situation on the agricultural and energy markets, the implementation of large investment projects, billions from Ukrainian guest workers. The price of real estate shows a steady increase of 1-3% per month. Growth phase: you need to buy.
Promising areas of investment
According to analysts, in the medium term, Ukraine will intensify its transport, agricultural, and energy potential. Today in Odessa IT-hubs are working, developing “green” energy, light industry and tourism. Economic development means rising prices in the real estate market. For private investors, the easiest option to make money in the context of Ukraine’s GDP growth is the real estate market. An investor operates with two main mechanisms for generating profit: resale and receipt of passive income from rental.
In conditions of interest-free installments from developers, the speculative component of the resale of primary real estate generates income up to 35% per year – subject to the purchase of an object with 100% payment at the level of the pit.
To ensure customer safety and calculate the prospects of the transaction, InvestPro carries out comprehensive diagnostics of the developer, checks the legality of permits and calculates the potential liquidity of the object.
The median payback rate of an Odessa apartment purchased for rental purposes is 15% per year. Most regions of Ukraine give this indicator when renting a store on the main street. The economic growth of the region and the intensification of tourism have led to a sharp increase in rental rates. In 2018 alone, prices rose by an average of 25%.
InvestPro provides asset management in Odessa on behalf of non-resident investors, residents of Odessa and people who do not reside permanently in Odessa. Analysts monitor the dynamics of prices in the rental market, monitor the tenants’ compliance with the terms of the contract and monitor the physical safety of the property. The company’s task is to maximize profits for the investor.
The nuances of liquidity of Ukrainian housing
Up to 75% of the country’s housing stock requires major repairs and is characterized by a low level of energy efficiency. Old communications, high heating costs, uncomfortable layouts and a depressing social environment for Khrushchev residents reduce the liquidity of such facilities against the backdrop of new buildings in 2005-2019.
Potential buyers and tenants prefer to choose housing in houses:
1. with developed transport and social infrastructure;
2. with a guarded yard or porch;
3. when formed OSMD (association of co-owners of an apartment building) – savings on operating costs up to 35%;
4. with autonomous heating or a roof boiler – savings on heating up to 60%;
5. with a modern layout and communications;
6. with comfortable conditions for sports, recreation for children and senior citizens, motorists.
InvestPro experts systematically monitor the real estate market and analyze potentially attractive investment sites. The growth phase has come – it’s time to invest money and earn income.